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OPAP hails resilient Q3 performance as profit climbs

| By Robert Fletcher
Sazka-owned Greek gambling operator OPAP reported a slight year-on-year decline in revenue in its third quarter, though reduced spending helped push net profit up 6.7%, as the business began its recovery from novel coronavirus (Covid-19).

Gross gaming revenue (GGR) for the three months to 30 September amounted to €391.0m (£348.8m/$465.9m), down 0.7% from €393.6m in Q3 of last year.

Lottery revenue, OPAP’s main source of income fell 9.3% to €179.1m, primarily due to the impact of Covid-19 restrictions on retail locations, including social distancing and capacity limits.

However, following the restart of many major sports events in Q3 – having been postponed since mid-March or cancelled altogether – revenue from sports betting jumped 13.9% to €104.6m.

Video lottery terminal (VLT) revenue also increased 10.0% year-on-year to €80.1m, partly due to the easing of Covid-19 lockdown measures in OPAP’s core markets. However, revenue from instant and passive games slipped 14.1% to €27.1m as OPAP felt the impact of retail-focused Covid-19 restrictions.

“Our performance came close to last year’s levels, aided by increased sportsbook activity in Q3 and ongoing growth of online and VLTs, which counterbalanced a drop in lottery and instant and passives,” OPAP chief executive Jan Karas said.

“At the same time, our effort to tap the markets was a remarkable success demonstrating investors’ confidence and enhancing our liquidity.”

In terms of expenses, operating costs in Q3 totalled €57.7m, down 3.8% from €60.0m in the same period last year, as OPAP spent less on agent commissions and other operating activities.

Spending remained level in terms of staffing and other operating expenses, while marketing costs were lowered, which left OPAP with €105.0m in earnings before interest, tax, depreciation and amortisation (EBITDA), up 1.5% on 2019.

After accounting for depreciation, amortisation and impairment costs totalling €26.9m, this resulted in an operating profit of €78.2m, an increase of 4.4% on €74.9m last year.

OPAP paid €10.2m in finance costs, which left it with €68.4m in profit before tax, level with last year. However, after paying €16.1m in tax, compared to €19.4m in 2019, this resulted in a net profit of €52.3m, up from €49.0m in 2019.

Other major developments during Q3 included OPAP completing its acquisition of a 51% stake in Stoiximan Group’s Greek and Cypriot operations, more than 18 months after announcing the deal. The operator then increased its stake to 84.48% earlier this month.

As to how Q3 impacted OPAP’s year-to-date performance, GGR for the business in the nine months to the end of September was €898.9m, down 21.4% on last year, due to the impact of Covid-19 restrictions and measures in the first half of 2020.

Lottery revenue was 24.3% lower at €436.6m, while sports betting revenue fell 17.9% to €233.1m, VLT revenue 20.8% to €168.5m and instant and passives revenue 39.3% to €60.7m.

Operating expenses were 5.9% lower at €182.5m, but EBITDA for the period was down 31.9% to €207.6.m. Operating profit was 47.6% lower at €115.1m in 2020 while profit before tax more than halved from €200.9m to €93.3m.

OPAP paid €22.9m in income tax during the nine-month period, leaving it with a net profit of €70.4m, almost half the €140.7m it recorded at the same point in 2019.

“Going forward, in the volatile environment of the pandemic and the second lockdown, our focus remains on protecting and actively supporting our employees, partners and stakeholders, safeguarding our healthy financial position and enhancing our product proposition,” Karas said.

“We remain confident in our ability to face future challenges and deliver positive results.”

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